Spot FX Tips for Futures Traders

[jonbig04 10]

Some of us who trade futures are thinking of also looking into spot forex for various reasons (small position sizes, volatility, flexible trading hours etc).

 

However there seem to be a lot of horror stories surrounding spot fx and I'm a little tentative about just picking a broker out of thin air. I'm hoping some of you spot traders can chime in with some general tips for us futures guys.

 

My biggest question is what to look for in a broker? There are a million of them out there. Any other tips about trading spot that us futures traders wouldn't know are appreciated. :beer:

[MidKnight 12]

Check out a thread started by Cory on this topic of spot FX and brokers. The only other tips I can comment on are that price movement is not a reflection of the last trade as it is in the futures market. Because spot FX is decentralized, it is impossible to ever know the last trade. What you see updating on the charts is strictly a bid/ask change and most charting packages will represent price as (bid + ask) / 2. Also, because you use volume in your attempt to asses breakouts, you will not have this available on the spot FX world.

 

Welcome to the dark side :haha:

 

With kind regards,

MK

[weed 10]

hey friend

 

i trade with oanda, and do my charting with metatrader 4 with a feed from alpari

 

i'm sure you've heard all kinds of horror stories about spot fx brokers.

 

oanda is way too big of a corporation to mess around

 

(except for news times) the spreads on the majors are 1 pip during the overlap of london and US trading sessions (1:00 EST to 11:00 EST is the best time)

 

my favorite thing about oanda is the fact that you can have any position size you want, 50:1 lev (if you like that stuff), and no miniumum acct balance

 

you can open an acocunt and deposit 25 cents and trade to see if you like it.

 

like i said my favorite thing is flexible position sizing. if your account is 100k and you are only down to risk 2k on a trade, it doesnt matter how far your stop needs to be for your particular setup, you can just adjust your # of units until the distance to your stop shows you 2k (the $ value from entry to your stop is displayed at the bottom of the window where you enter your market/limit order.) it also shows you the $ val to your TP

 

another huge selling point for oanda is flawless execution, the second i buy/sell i'm filled no worries.

 

a couple months ago i was holding a position over the weekend and my stop was pretty close and price gapped WAAAY up past my stop but they still honored it

 

my only complaint is their charting software is really weird. their platform is java based. its cool that you can trade anywhere there is an internet connection, but it takes a long time to get used to their bare bones charting software. that's why i downloaded MT4 and opened an unlimited demo with alpari (both are free). hope that helps

[weed 10]

to the guy who said something about breakouts in forex

 

i'm a breakout trader and i don't use volume. trade the london/us overlap and you're straight.

 

everyone that i know that has traded for decades and pays their bills trading is a breakout trader in the spot FX market none of this futures nonsense (lol)

 

and i'm sure there are people here who are scared of the tick volume that is available for spot FX here let me post a chart

[macdfx 10]

and i'm sure there are people here who are scared of the tick volume that is available for spot FX here let me post a chart

 

Tell us what this "tick volume" is ....when you post the chart.

 

Thanks.

[weed 10]

penny stocks are you joking. reported you equity!

 

 

"Tick volume is defined as the number of price changes. Each time trading moves to a new price, the number of ticks by which the price has changed is added to the tick volume."

 

from http://www.ptti.com/html/help/tick_vol.htm

 

i dont really use the volume for much except for looking at stopping volume on the daily

 

but then my strategy is too simple to mess with abstract concepts like volume trend or s/r

[jonbig04 10]

Thanks for the responses guys. I'm still searching around for brokers. I don't need volume while I'm trading, I just miss it because I hate using time based charts. I've been watching a few pairs for the last couple days and am trying to get into the groove of them.

[weed 10]

Thanks for the responses guys. I'm still searching around for brokers. I don't need volume while I'm trading, I just miss it because I hate using time based charts. I've been watching a few pairs for the last couple days and am trying to get into the groove of them.

 

you cant beat trends that last for years

 

thats why i trade breakouts into the trend, take half off at 1:1 and let it ride without looking at it for days. you can take some off here and there in whatever amount with oanda to smooth your equity curve

[AmCan1 10]

For what it's worth, I trade currency futures every day. I also intend to trade the spot market and just opened an account with Oanda, which came highly recommended from an experienced trader friend of mine who only trades the spot market. I plan on using Tradestation charting to determine my trades though, since that's what I use for my futures trading. Since I'm daytrading the currency futures, I'll probably be swing trading the spot market. I figure the larger trades will give me a better chance of dodging my broker's interest of taking out my stops but also, will give me diversification.

[weed 10]

my broker's interest of taking out my stops

 

come on dude are you for real

[AmCan1 10]

Weed, whether brokers do that or not (I've heard many horror stories whether real or just perceived to be real) I think you missed the point. In my view, since fx is not a centralized market, I think swing trading is a better approach. You also need to account for spread costs which will be a much smaller percentage of the overall trade profile with a swing trade than a day trade. I would prefer to daytrade currency futures. At least, that is what I am finding success in. That's just me, and that's what makes a market no? I do this, you do that? Whether a broker takes out my stop or not, is what it is. (Or isn't). I can gain greater control though with larger time frame trades vs smaller time frame trades. That's just logical. And yes, I am for real.

[weed 10]

little bit touchy my friend?

 

your broker doesn't care bout your stop. that doesnt mean that there isnt professional money interested in them though.

 

i swing trade that shit is my bread and butter, and is one of the common factors in long term success for the professional traders i know

 

try and relax friend!

[AmCan1 10]

I'm quite relaxed Weed. Thanks for your concern. By the way, do you have any thoughts regarding FOMC day? Do you trade your normal plan or do you do something different? I'm must curious. I've done great on some markets in the past on FOMC days but I'm particularly interested on how currency traders handle Fed event sessions.

[Justaguy 10]

As for broker, I personally use Oanda. Did venture to FXCM for a while but my overall experience is much better with Oanda. The ability to gear in with position sizing makes a world of difference. Pretty much the same feeling as Weed. I use Ninja charting with PFG data feed however

 

Due to the narrow spreads in comparison to many, I day trade through Oanda as well. Stop runs by brokers may have been the flavor of the day moons ago, now, different story. Dealing desks may take the opposite position but so what? I have never seen a massive discrepancy between Oanda charting prices and my Ninja feed.

 

While the cost may be higher in spot FX as opposed to futures, it's all the same to me. Cost of doing business. My spread cost is more than covered and being diversified in trading style (swing/day), helps to smooth the equity curve. You could say that day trading pays the bills and swing trading pays for the future.

 

I'm with Weed again on breakouts. You could sit and wait for a retrace that never comes in the immediate future. Sure, you can offset that by dropping to a lower time frame to grab the retrace but then you have to decide where you are getting in as price moves away from the main direction (ala picking bottom/top). 1-2-3 reversal? An indicator trigger? Another breakout?

 

Going astray from the topic. Hope this helped

[bathrobe 10]

Some of us who trade futures are thinking of also looking into spot forex for various reasons (small position sizes, volatility, flexible trading hours etc).

 

However there seem to be a lot of horror stories surrounding spot fx and I'm a little tentative about just picking a broker out of thin air. I'm hoping some of you spot traders can chime in with some general tips for us futures guys.

 

My biggest question is what to look for in a broker? There are a million of them out there. Any other tips about trading spot that us futures traders wouldn't know are appreciated. :beer:

 

So strange you started this thread, for the last 3 weeks I have been looking into swinging spot fx, I was looking into the micro account that Thales daughter traded quite well to get a feel for the market. I look forward to more discussion on this.

[TheDude 10]

little bit touchy my friend?

 

your broker doesn't care bout your stop. that doesnt mean that there isnt professional money interested in them though.

 

i swing trade that shit is my bread and butter, and is one of the common factors in long term success for the professional traders i know

 

try and relax friend!

 

Hi Weed, Please can you explain this a bit more please?

 

To my understanding, if I have a position with a FX bucket shop, then they are my counter party. My stop sits with them, and them only as the price they publish to their customers (you and me) is based around what the real spot fx market is doing. In fact, my order never really sees the real FX market - it is just a bet with the FX bucket shop.

 

I say this because you can not place orders for any less than $500,000 in the real FX market. Even then, nobody would want to trade with you as minimum deals tend to be multi-million in the banking/real market.

 

Therefore, to my thinking, there is no 'professional money' to go after your stops, as such participants do not have accounts with FXCM, O&A etc. Even if they did, they would have nothing to gain as the FX broker is their counter party, not another customer. You're not trading on an exchange - it's decentralised and not that well regulated.

 

Given the business model in which a retail FX broker operates then, he can only derive income in one of two ways:

1/ Customer losses. He is relying on the statistic that most people depositing funds will blow it with in 6 months.

2/ Piggybacking successful traders who have been identified.

 

Scenario 1 is the more likely. If your business was scenario 2, you'd be better off posting a job ad.

 

What better way to create a customer loss than pinching stop-loss orders by quoting 1-3 ticks away from the market when near a TA level - where everyone places their stops? Besides, your counter party/broker knows your position, your account size, and where your orders are!!! He probably also has some BI software running as well to identify common behavioural patterns.

 

I look forward to your input - or anyone elses if I am wrong here.

 

Thanks,

 

Dooderino.

[moscu 10]

Does anybody know if IB run stops like some other brokers. The reason I like them is that they charge a commission. That is the way they make money plus they are a Non Dealing Desk. Theoretically they should not be the counter party to your trade. I been using them for more than 2 years. I use stop limit orders to enter the market and sometimes they are almost a pip over the limit. I exit thru a stop and once in a while I get a fill that is more than 2 pips over my stop.

I am a scalper seeking few pips in high volatility markets. I successfully trades during the flash crash (really good day) with IB. I did not see any slippage over the usual that day and even during high news. One con about them is their report and keeping track about your trades and profits. It is probably the worst report out there.

I am interested in testing FXCM since it is the largest broker out there. I would like to hear from somebody that have day trade both. One thing I like from FXCM UK is that you can be both long/short in the same pair. This open a new set of trading strategies.

For me the cost is very important since I am scalping. Last year I had one month where I paid $5000 in commissions and I was only able to make few hundreds. Since then I change my strategies to look for a bigger profit channel. but If I could get half the cost I could exploit the smaller moves for a few thousands a day.

Another fact that intrigues me about the retail Forex is how the fills happen. The standard contact size is $100,000. So if you sent an order for $150,000 do they send $100,000 to the Intermarket and then fill $50,000 from their own market? Basically I would like to know if there is any advantage by trading multiples of the standard contract versus non-standard.

 

Moscu

[macrylinda 10]

you cant beat trends that last for years

 

thats why i trade breakouts into the trend, take half off at 1:1 and let it ride without looking at it for days. you can take some off here and there in whatever amount with oanda to smooth your equity curve

 

For what it's worth, I trade currency futures every day. I also intend to trade the spot market and just opened an account with Oanda, which came highly recommended from an experienced trader friend of mine who only trades the spot market. I plan on using Tradestation charting to determine my trades though, since that's what I use for my futures trading. Since I'm daytrading the currency futures, I'll probably be swing trading the spot market. I figure the larger trades will give me a better chance of dodging my broker's interest of taking out my stops but also, will give me diversification.